TRADE & TARIFF ALERT - July 21, 2026

TRADE & TARIFF ALERT

• U.S. Set to impose 50% Tariff on Canadian Apparel and Textiles, among other products — Effective August 19, 2026
• New Section 338 duties capture clothing and textile goods, with no exemption for CUSMA-compliant products.

Canadian apparel and textiles are now directly in scope of proposed U.S. tariffs. Under a proclamation signed by the President on July 20, 2026, the United States intends to apply an additional 50% duty to a broad range of Canadian-origin goods — apparel and textiles included — effective 12:01 a.m. ET on August 19, 2026.

Critically, the measure provides no exemption for CUSMA-compliant goods: products compliant with the Canada–United States–Mexico Agreement are on the same footing as other Canadian goods.

What is covered

The tariffs imposed reach far beyond the automotive, alcohol, and dairy sectors named in the proclamations. The product coverage captures a wide range of textiles and apparel across Chapters 50–63 — knit apparel (Ch. 61), woven apparel (Ch. 62), and made-up textile articles in various other chapters. Companies that export to the United States should consult this annex to confirm whether their products are covered.

The duty would be administered through a new tariff line, HTS 9903.03.14 ("the applicable subheading duty + 50%"), rooted in Section 338 of the Tariff Act of 1930 — invoked for the first time in its history. 

No exemption for CUSMA-compliant goods

This is the key break from earlier action. The prior IEEPA tariffs exempted CUSMA-qualifying goods; this Section 338 action does not.  This action only applies to goods from Canada - it does not apply to Mexico.

The deadline

The duty would apply to goods entered for consumption on or after 12:01 a.m. ET, August 19, 2026. The entry date — not the order or ship date — governs, so Canadian exporters will want to determine whether shipping can be moved up and should plan entry timing now.

Having said that, there is nothing that prevents the US government from changing any aspect of this tariff action, including the proposed rate of duty (50% is the maximum allowable under the statute), product coverage, or timing. 

Canadian response

Prime Minister Carney issued a statement condemning the measure as the latest unilateral breach of CUSMA and affirming that Canada stands ready to negotiate while taking “any measures necessary” to protect its economy and workers. Over the coming days, the CAF will work with the Canadian government on its response to these actions.

While many regard the action as a negotiating tactic, and one which is likely to be challenged in the U.S. courts, it nonetheless significantly increases pressure on the Canadian government.

CAF contact

CAF members that need clarification on how this action may impact their businesses should contact Bob Kirke at the Canadian Apparel Federation (bkirke@apparel.ca).

If your firm is not already a member, contact us.

References (White House)

• Fact Sheet: President Imposes Additional Tariffs on Canada — https://www.whitehouse.gov/fact-sheets/2026/07/fact-sheet-president-donald-j-trump-imposes-additional-tariffs-on-canada/
• Proclamation — Motor Vehicles (the governing proclamation to which the annexes attach) — https://www.whitehouse.gov/presidential-actions/2026/07/imposing-additional-duties-to-offset-canadian-discrimination-against-the-commerce-of-the-united-states-with-respect-to-motor-vehicles/
• Annex I — product schedule listing apparel/textiles (Chapters 50–63) — https://www.whitehouse.gov/wp-content/uploads/2026/07/ANNEX-I-3.pdf
• Annex II — HTSUS modification creating duty line 9903.03.14 (incl. apparel) — https://www.whitehouse.gov/wp-content/uploads/2026/07/Annex-II-2.pdf

Additional government sources

• Prime Minister of Canada — Statement by PM Carney on the U.S. administration’s intention — https://www.pm.gc.ca/en/news/statements/2026/07/20/statement-prime-minister-carney-united-states-administrations-intention
• USTR — Ambassador Greer Statement on Section 338 Tariffs on Canada — https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/ambassador-greer-issues-statement-president-trump-imposing-section-338-tariffs-canada